Thrill-Ride Thursday: Jobs, What Jobs?
by phil - October 15th, 2009 8:12 am
Yesterday was very hard for us.
Our theoretically conservative $100,000 Virtual Portfolio dropped 6% in one day as we had a farily bearish position into options expiration that I stubbornly refused to adjust this week. Surely, I thought, after running up 250 Dow points from Thursday, 10,000 would act as some kind of resistance? We're also up a neat 500 points for the month of October so that's our 5% rule and to not get a 1% pullback, even in the most bullish of markets, is very rare indeed.
So we stayed bearish yesterday and got crushed by the AMZN $90 calls we sold as well as UYG calls we sold and our PSQ calls we bought for protection got slaughtered as the Nasdaq flew up not 5% but 5.5% for the month and up 6.2% from it's October 2nd low. While we are disappointed, we're not terribly concerned as we're only going to roll the calls to November anyway and I did promise the members that, if we hold our breakout levels for 2 closes, then I'll be shifting more bullish. I've been trying to identify more bullish positions this week but our mix has still tended bearish as I'm just having so much trouble buying into this rally.
In yesterday's Member Chat, my comments on the current situation was:
I do wish we were more bullish, this is a very smart group of people and we’re pretty bearish but so is the general investing public or there’d be volume to this rally. I have a hard time ignoring the fact that 600,000 more people lost their jobs this week and, even if it’s "only" 500,000, I still think that’s not really a sign of a healty economy. I think the REITs are off in fantasy land and I think so is the government, who cannot keep borrowing money at these low rates. The dollar has dropped 25% of it’s value since March so the market is only 25% ahead of the currency fall which means a flight back to the dollar, which could happen very suddenly if an EU nation like Spain collapses, could send our market down as fast a 9/11.
That being said, we have no choice but to follow the technicals and now that we can look at nice, easy support levels like Dow 10,000,
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$100,000 Virtual Portfolio Update – Week 5
by phil - October 4th, 2009 8:28 am
Well this has been annoying…
After 30 days of trading our current virtual portfolio value is just $100,454.39 as we took quite a setback when we sold naked calls ahead of the move up. Fortunately, we didn't lose our cool and rode it out. In fact, we only made one trade in the past two weeks so there hasn't been much to report and there still isn't but the end of our first month is a good time for an update. Of course, we do have a lot of outstanding October Premium to collect so the next two weeks are when we make our real money…
We still have $92,315 in cash so plenty of buying power should we choose to deploy it but we are sticking with our plan of scaling into the postions we have, which means we're letting them run out through October 16th expirations and we'll see if we finally get the bargains we've been waiting for to set up our longer term bull plays. For now, in this VERY conservative, low-touch virtual portfolio, we've been following Warren Buffett's Investing Rule #1: Don't lose money!
| Description | Price Paid | Last Price | Qty | Market Value | Margin Req. | Profit Loss | % |
|---|---|---|---|---|---|---|---|
| AIG CALL 40 Oct 09 | $6.30 | $5.50 | -1 | $550.00 | $1,196.20 | $80.00 | 12.70% |
| On target with AIG at $43.40, this is typical of our outstanding sales with the VIX so high – we just have to wait. | |||||||
| AMZN CALL 90 Oct 09 | $3.60 | $2.80 | -10 | $2,800.00 | $16,127.50 | $800.00 | 22.22% |
| We wouldn't do this play if we needed the margin but a nice $2,800 to collect if AMZN stays below $90 | |||||||
| BAC CALL 10 Jan 11 | $8.60 | ||||||
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$101,674 Virtual Portfolio Update – Week 3
by phil - September 13th, 2009 8:26 am
Slow and steady wins the race!
We had a big run and capped our gains a little early for the week by doubling up on our PSQ (short Nasdaq) calls on Thursday's mad run. This did the job of locking in our profits but that hedge is now making up $450 of losses, which is 1/3 of all our losses for the month. Still we managed to gain $396 for the week with still just $28,537 in positions so that's another 1% for the week, a pretty good clip…
I am happy to say that our $100K Virtual Portfolio is now live and available on WallStreetSurvivor.com at:
We're actually well ahead of our cash goal as we also have $86,101 in cash along with our $28,537 in positions with $13,768 in margin devoted to some of the longer hedges we've sold. That leaves us with $147,935 in margin buying power and we're going to use it to do a few "stupid option tricks" into expirations that should pick us up a little extra cash over the next 5 days and Wednesday or Friday we must expect to make our rolling moves for the current month and I'll be sending out Alerts to Members later in the week. For now, we are very happy with all of our current positions as we have 16 winners and just 7 losers – that's very good for a well-hedged virtual portfolio…
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$100,000 Virtual Portfolio Update – Week 1
by phil - August 30th, 2009 9:14 pm
It's been a crazy first week but we're up a little already.
So far, only 16 of the 26 contracts we wanted have been filled and we've had some difficulty due to Wall Street Survivor not allowing us to enter spreads, which led us to getting fairly random fills. Also, I apologize for the lack of access but I've been assured those issues will be resolved next week. For that reason, I have not deviated from the Alert I sent out on Monday and all those unfilled bids remain in place but let's use this time to review where we are now as far as what's open and what's left to fill.
As we've collected plenty of money already we are achieving our primary goal so this is not about making drastic changes but let's analyse each play and see what has been filled and what needs to be filled next and whether or not we feel we can hit that target next week (action items are highlighted in red):
AIG: 2011 $30 calls filled at $13.45 (now $26.50), 2011 $30 puts filled at $9.05 (now $9) and Sept $33 calls sold for $4.70 (now $17.95).
It stinks that we couldn't fill the $33 puts as that would have given us a big gain. In chat we discussed taking them out anyway and leaving the long calls as is, expecting a pullback. No matter what happens, we have an expectation of rolling this caller to October puts and calls and those strikes pay more than $20 so this is a non-issue at the moment and we successfully collected $470.
We do want to roll the 2011 $30 put to the 2011 $55 puts, now $24.88 for $16. That puts us into a guaranteed $25 spread for $16, a good trade-off.
BAC: 5 Sept $17 puts were sold for .51 (now .39) and 5 2011 $20 puts were bought for $5.45 (now $5.55).
We didn't fill the call side of this spread, which was buying 5 2011 $10 calls for $8.60 (now $9.10) and selling 5 Sept $17 calls for $1.60 (now $1.38). We're looking for the banks to sell off but, if we do trigger the short sale on the upside, we will need to take the cover leap. Collected $255.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.